Civil Procedure

Foreign Law – Standard of Review – Judicial Notice – Comity

Hennessy v. Wells Fargo Bank N.A., 2022 WI 2 (filed 14 Jan. 2022)

HOLDING: The circuit court properly exercised its discretion when upholding a contract based on a judgment by a Mexican court.

SUMMARY: A bank loaned the Hennessys $7.5 million to build a condominium complex in Mexico. When the development failed, the bank filed a foreclosure action in a Mexican court, which yielded a judgment against the Hennessys, including personal liability. Later, the Hennessys filed a declaratory-judgment action in a Wisconsin court to establish that the statute of limitation had run for a breach-of-contract action under Wisconsin law. The bank counterclaimed, seeking domestication of the Mexican judgment.

The circuit court conducted an evidentiary hearing on the issue of Mexican law, ultimately ruling that the Mexican judgment was valid and enforceable against the Hennessys personally. In a published decision, the court of appeals affirmed. See 2020 WI App 64.

A unanimous supreme court affirmed in a majority opinion authored by Chief Justice Ziegler that addressed far-ranging issues involving proof of foreign law, judicial notice of foreign law, and principles of international comity.

The first issue concerned the standard of review. Under long-standing Wisconsin law, questions of foreign law are treated as factual issues, subject to abuse-of-discretion review on appeal. Judicial notice cannot be taken of foreign law (see ¶¶ 22-26). The supreme court declined the Hennessys’ request that the court overturn this precedent and treat foreign law as a legal question, as other jurisdictions have done. Simply put, the justifications underlying the current practice “remain valid today” (¶ 29). It also declined the invitation to permit judicial notice of foreign law. The supreme court said that the circuit court properly interpreted Mexican law, as reflected by the record (see ¶ 47).

The supreme court also held that the circuit court properly domesticated the Mexican judgment (see ¶ 57). “[W]hen considering whether to enforce a foreign country’s judgment, courts in this state look to the common law and traditional doctrines of comity” (¶ 39). Comity cannot be “distilled into clearly defined rules,” yet over time courts have recognized several “well-established reasons for declining to recognize a foreign country’s judgment” (¶ 41). None of those reasons applied here. The supreme court emphasized that courts must not reopen the “merits of the case and consider whether foreign courts accurately applied their own law” (¶ 43).

Justice Dallet joined the majority opinion but concurred in a separate opinion, joined by Justice Hagedorn and Justice Karofsky. The concurrence focused on the judicial notice provisions of Wis. Stat. section 902.02, which lead “to a single conclusion: Wisconsin courts cannot take judicial notice of foreign countries [sic] laws; rather the parties must prove them as facts” (¶ 65). Wisconsin is presently an “outlier” in this respect, but any change in the law must come through legislation (¶ 67).

Criminal Procedure

Sentencing – Firearms – Improper Factors

State v. Dodson, 2022 WI 5 (filed 26 Jan. 2022)

HOLDING: The defendant failed to show by clear and convincing evidence that the circuit court relied on an improper factor – gun ownership – when sentencing him for a homicide.

SUMMARY: Following a minor traffic accident, the defendant searched for the car that had struck his vehicle. When he spotted what he mistakenly thought was the other car, he pursued it until that driver pulled over. Both men got out of their cars. The defendant was armed with a pistol bearing a 17-round clip. Standing behind the driver’s side door of his car, the defendant shot the other person six times, killing him. The victim was unarmed and was not the driver the defendant had sought out. The defendant fled the scene but later turned himself in.

The defendant pleaded guilty to second-degree intentional homicide (excessive use of force in self-defense). At the sentencing, the judge observed that the defendant was an otherwise “model citizen,” and, in attempting to make sense of what he called a baffling case, the judge made observations about how gun ownership affects some people. The court sentenced the defendant to 14 years’ initial confinement followed by six years’ extended supervision.

In a postconviction motion, the defendant argued that the circuit court’s statements at sentencing demonstrated an improper reliance on his gun ownership and concealed-carry permit, in contravention of his Second Amendment rights. The circuit court denied the motion. In an unpublished decision, the court of appeals affirmed.

The supreme court affirmed in a majority opinion authored by Justice Karofsky. The defendant’s burden was to show by clear and convincing evidence that 1) the trial judge relied on an improper or irrelevant factor, and 2) the trial judge actually relied on that factor when sentencing him. Primary sentencing factors include the seriousness of the offense, the defendant’s character, and protection of the public. The cases also delimit a host of “secondary factors,” including the defendant’s personality and social traits (¶ 9).

The sentencing transcript must reveal “clear and convincing evidence that the [improper] factor was the sole cause of a harsher sentence” (¶ 10). The defendant will fail on the improper-sentencing-factor argument if the transcript shows a “reasonable nexus” between the challenged factor, here gun ownership, and a relevant proper factor (id.). The supreme court assessed the sentencing judge’s remarks in terms of their context, their connection to the defendant’s predisposition as shown by the record, and the judge’s actual reliance on that factor. The defendant failed to show that the defendant’s sentence was based “solely” on his gun ownership and possession (¶ 17).

Justice Hagedorn joined the majority opinion but filed a concurring opinion that emphasized that the defendant failed to show that he was punished “solely” for his Second Amendment rights. He also argued that the “reasonable nexus” analysis is more properly considered under the “proper factors” inquiry.

Justice R.G. Bradley, joined by Chief Justice Ziegler and Justice Roggensack, dissented. The dissent elaborated on what it identified as the trial judge’s “hoplophobia” (“irrational fear of guns”): “In this case, the sentencing judge’s hoplophobia was on full display – he gave Octavia Dodson a particularly harsh sentence because Dodson legally purchased and carried a firearm. In doing so, the sentencing judge violated Dodson’s constitutional right to keep and bear arms and deprived Dodson of due process of law” (¶ 24).

State Government

Wisconsin Legislature – Contracts for the Purchase of Attorney Services – Standard for Granting a Stay of an Injunction Pending Appeal

Waity v. LeMahieu, 2022 WI 6 (filed 27 Jan. 2022)

HOLDINGS: 1) The leadership of the Wisconsin Legislature had authority under Wis. Stat. section 16.74 to enter into contracts for legal services relating to the decennial redistricting process. 2) The circuit court erroneously declined to stay its injunction pending appeal.

SUMMARY: The defendants in this case are Senator Devin LeMahieu (the majority leader of the Wisconsin State Senate) and Representative Robin Vos (the speaker of the Wisconsin State Assembly); together they represent the leadership of the Wisconsin Legislature (see ¶ 1 n.3). On behalf of the legislature, they entered into contracts for attorney services regarding the decennial redistricting process and any resulting litigation.

In a taxpayer lawsuit filed in Dane County Circuit Court, the plaintiffs claimed that the defendants lacked authority to enter into the contracts. The circuit court declared the contracts void ab initio and enjoined the defendants from issuing payments under the contracts for legal services. The circuit court also refused to stay its injunction pending an appeal of its decision.

The supreme court granted the defendants’ petition to bypass the court of appeals. In a majority opinion authored by Chief Justice Ziegler, the supreme court reversed the decision of the circuit court. The majority concluded that the defendants “had authority under Wis. Stat. § 16.74 to ‘purchase[]’ for the legislature ‘contractual services’” and thus “the agreements at issue were lawfully entered” (¶ 2).

“The statute explicitly permits each house of the legislature to purchase ‘contractual services’ that are ‘required within the legislative branch’” (¶ 23). [The term “contractual services” is unambiguous and includes attorney services (¶ 26).] “The undisputed facts show that, in line with decades of bipartisan precedent, the Senate and Assembly Committee on Organization determined that the hiring of legal counsel to assist with redistricting was needed” (¶ 32), and they vested the defendants with authority to enter into the contracts at issue (see ¶ 41). Accordingly, the circuit court’s decision to enjoin enforcement of the contracts was improper (see ¶ 2).

The majority clarified the standard for granting a stay of an injunction pending appeal. “Courts must consider four factors when reviewing a request to stay an order pending appeal: (1) whether the movant makes a strong showing that it is likely to succeed on the merits of the appeal; (2) whether the movant shows that, unless a stay is granted, it will suffer irreparable injury; (3) whether the movant shows that no substantial harm will come to other interested parties; and (4) whether the movant shows that a stay will do no harm to the public interest” (¶ 49). The relevant factors are not prerequisites but are interrelated considerations that must be balanced (see id.).

With regard to the first factor, the relevant inquiry is whether the movant made a strong showing of success on appeal. “When reviewing the likelihood of success on appeal, circuit courts must consider the standard of review, along with the possibility that appellate courts may reasonably disagree with its legal analysis” (¶ 53). When reviewing the likelihood of success on appeal, the probability of success that must be demonstrated is inversely proportional to the amount of irreparable injury the movant will suffer absent the stay. Thus, the greater the potential injury, the less a movant must prove in terms of success on appeal.

However, the movant is always required to demonstrate more than the mere possibility of success on the merits (see ¶ 54). When considering potential harm to the movant, circuit courts must consider whether the harm can be undone if, on appeal, the circuit court’s decision is reversed. If the harm cannot be mitigated or remedied upon conclusion of the appeal, that fact must weigh in favor of the movant (see ¶ 57). As for potential harm to other interested parties, courts consider whether the movant shows that no substantial harm will come to the other parties (see ¶ 58).

Applying these factors to the present litigation, the supreme court concluded that the circuit court erroneously exercised its discretion by refusing to stay its injunction pending appeal (see ¶ 61). With regard to the first factor, the circuit court should have considered how other reasonable jurists may have interpreted the statute (see ¶ 53) rather than just referring to its own legal reasoning when it granted summary judgment (see ¶ 51).

As for the harm factors, the circuit court failed to consider that, if its order were overturned, the legislature could not get legal advice “back” for the time in which an injunction was in effect (¶ 57). By comparison, the harm to the plaintiffs was minimal (see ¶ 58). Lastly, the circuit court failed to address the public interest served in allowing the legislature to obtain needed legal advice for redistricting (see ¶ 60).

Justice Hagedorn joined the majority opinion but also submitted a concurrence.

Justice Dallet filed a dissent that was joined in by Justice A.W. Bradley and Justice Karofsky.

Unemployment Insurance

Untimely Application to Succeed to Unemployment Insurance Account of Previous Owner of Business – Excusable Neglect – Interests of Justice

Friendly Vill. Nursing & Rehab LLC v. Wisconsin Dep’t of Workforce Dev., 2022 WI 4 (filed 26 Jan. 2022)

HOLDINGS: 1) “Interest-of-justice” factors do not apply in the analysis of “excusable neglect” under Wis. Stat. section 108.16(8)(b)4. 2) There was no basis in the record on which to excuse neglect on the part of the purchaser of a business in filing an application to succeed to the unemployment insurance account of the previous owner after the statutory deadline.

SUMMARY: Eden Senior Care is an Illinois company that purchases and rehabilitates nursing homes. In 2017, it purchased Friendly Village Nursing Home in Wisconsin. However, it untimely filed an application with the Wisconsin Department of Workforce Development (DWD) to succeed to the unemployment insurance account of Friendly Village’s previous owner. This was a potentially costly error because successors generally pay lower rates for unemployment insurance than nonsuccessors. However, under Wis. Stat. section 108.16(8)(b)4, the mistake was not necessarily fatal if it were “a result of excusable neglect.”

In this case, the Labor and Industry Review Commission (LIRC) concluded that the record was insufficient to establish that Eden’s application was late because of excusable neglect. Eden appealed to the circuit court, which affirmed LIRC. The circuit court rejected Eden’s argument that LIRC erred because LIRC did not apply “interest-of-justice” factors in its analysis. In a published decision, the court of appeals affirmed. See 2021 WI App 9.

In a majority opinion authored by Justice Dallet, the supreme court affirmed the court of appeals. The first issue the court considered was whether interest-of-justice factors play a role in the excusable-neglect analysis under Wis. Stat. section 108.16(8)(b)4. It concluded that they do not (see ¶ 30). Accordingly, LIRC did not err when it did not consider the interests of justice when reaching its decision.

The court next considered whether Eden demonstrated excusable neglect for its failure to timely file an application to succeed to the unemployment insurance account of Friendly Village’s previous owner. Excusable neglect is an error that a reasonably prudent person would have committed under the same circumstances. The inquiry is context dependent and requires a showing of something more than ordinary neglect or carelessness (see ¶ 21).

In this case, the acquisition of Friendly Village by Eden triggered several statutory requirements, among them registration and reporting of a business transfer. Eden could comply with those requirements by submitting two forms to the DWD: the employer registration report and the report of business transfer.

Eden directed its senior business analyst – who at the time was 22 years old and who had bachelor’s degrees in communications and biology – to complete the employer registration report. In response to the question in the report, “Did you acquire this activity from a previous employer?” the analyst answered “no.” Had the business analyst answered this question correctly, the DWD likely would have contacted Eden and notified it to file the report of business transfer, which can be used as an application to succeed to the previous employer’s unemployment-account experience. As it turned out, Eden filed its application six weeks after it was due. According to Eden, it was not until the due date had passed that it first learned of the option to acquire the prior owner’s unemployment-account experience.

The supreme court agreed with LIRC that the record in this case contained insufficient evidence to warrant a finding of excusable neglect for the tardy application. Eden’s senior business analyst did not testify at the hearing before an administrative law judge, and the record contains no evidence that he in fact misunderstood the question quoted above and contains no evidence explaining why he answered the question “no.”

“In the absence of the employee’s direct testimony, Eden points to the employee’s relatively young age, inexperience, and lack of legal training as sufficiently justifying his mistake. To the extent that the employee’s youth and inexperience contributed to his supposed confusion, a reasonably prudent person in the same situation – having no unemployment-insurance experience and not fully understanding the consequences of certain responses on the Employer Registration Report – would ask for help before submitting the document, or at least do additional research. There is no evidence that Eden’s employee did so. Moreover, Eden has offered no explanation for why it directed someone so inexperienced and unfamiliar with Wisconsin’s business-registration procedures to complete the Employer Registration Report” (¶ 16).

In sum, said the majority, “there is no basis in the record on which to excuse Eden’s neglect in filing its successor application after the statutory deadline” (¶ 30).

Justice Roggensack filed a dissenting opinion that was joined in by Chief Justice Ziegler and Justice R.G. Bradley.